FM may revise upwards fiscal deficit to 4.4%: SBI Research

Finance minister Arun Jaitley may revise upwards the fiscal deficit target for the current fiscal to 4.42 per cent up from 4.1 per cent projected in the interim budget, says a report by the Economic Research Department of State Bank of India (SBI).

"We can have a higher deficit number, possibly at 4.42 per cent without disturbing the borrowing estimates pegged at Rs 5.29 trillion in the interim budget as we believe the government can mobilise a significant amount of revenue through disinvestment given the current buoyant market conditions," the report authored by SBI chief economic adviser Soumya Kanti Ghosh said today.

Jaitley will present his maiden budget on July 10.

The report further said the good thing is that as per government estimates, it is carrying forward sizeable cash balance (Rs 1.04 trillion or 0.8 per cent of GDP) into this fiscal, a part of which may be used for redeeming government bonds without taking a recourse to higher market borrowings.

On the expenditure side, a bulge in capital expenditure is possible, even as it is unlikely that spending on subsidies pegged at 1.92 per cent of GDP in the interim budget may be revised downwards significantly, the report said.

Tax receipts are likely to grow at around 16.4 per cent down from 19 per cent projected in the interim budget.

"Our optimised nominal GDP projection for this fiscal is at 12.5 per cent, taking de facto the fiscal multipliers into consideration. This translates into a real GDP growth of around 5.5 per cent and inflation at 7 per cent, the report said.